Slowdown in Kiwi dairy output growth forecast

A report released by the New Zealand Department of Primary Industries was published last week, and has forecast a short term decline in the value of New Zealand’s dairy exports and a slowed increase for New Zealand’s dairy production.

Analysing the report Donagh Hennessy of Bord Bia says the number of cows and in-calf heifers in New Zealand currently stands at 5.18 million head, which is up over 3% on 2014 reflecting the record milk prices of 2014.

Hennessy also says that latest forecasts suggest cow numbers are expected to grow by a further 2.5% in 2016.

Milk production for this year is forecast to rise by 1.8% with a national milk solids production of 1.9 billion kg’s.

Hennessy says Milk productivity per cow is down by almost 2% but this is thought to be a combination of the drought and farmers drying cows off early because of the low milk price.

The drought in the South Island eased in March resulting in a strong recovery in production in the area, says.

The report says the average New Zealand price per kg of milksolids is forecast to be down this year to €2.90/kg.

Speculation on the recovery of the international prices has led to the belief that prices will increase to an average of €3.50 a kg of milksolids for 2016, according to Hennessy.

The value of New Zealand dairy exports are forecast to decline by 22% in 2015 to €8.8 billion. However, Hennessy says this would still remain 5% ahead of 2013 levels.

New Zealand exports to China have declined by up to 40% over the early months of 2015, reflecting a slowdown in demand and the fact that China continues to promote its own milk producers, he says.

According to Hennessy this has been offset by selling products at a lower price to emerging South East Asian markets, the Middle East and North Africa, which have shown increased dairy demand.